Crowdfunding 101: Before You Press “Publish”
If there’s anything I’ve learned over the past few months from setting up a crowdfunding campaign, it’s this: crowdfunding is possibly the most work-intensive way of gathering funding. And yet, ironically, it is also one of the most enjoyable – for entrepreneurs like me, day-to-day challenges present not just opportunities to meet with potential customers, but a reason to justify why it is that we’re doing this. For me, that justification came as a realization while I debated on pursuing a career of finance or entrepreneurial ventures: I need that thrill of working for myself, the (calculated) risk, and the personal value-add that I can feel when I work for or with a small team. There is enormous potential in a “shared economy,” and crowdfunding – equity-based or not – is a massive step in that direction. For those daring enough to pursue a crowdfunding campaign, read on…
To be concise, I’m giving a brief overview of the establishment and rigorous execution of a successful crowdfunding campaign from what I’ve learned from my own experiences and those of other successful crowdfunders. Here are some things you must assume:
- You will not raise as much as you can from going to venture capitalists or angel investors. If you’re looking to raise the money to cover your startup expenses, equipment, and more, look elsewhere. But that’s exactly why you and other startups choose to crowdfund – to dip your startup into the market and gauge the feasibility. If you’re lucky (and work extremely hard), you’ll get more research and publicity than you ever could by paying another company to do it for you.
- You should never expect any sales. None. Do not push that “Publish” button until you are all set, and expect to triple the time and work you’ve been putting into the project. Hit blogs. Hit the press. But, most importantly, talk to your consumers, and see what they have to say.
- Nobody wants to contribute to your campaign. Why should they? That’s the question you have to answer concisely and effectively – there’s no formula to apply to a startup, just as there’s no formula to apply to a crowdfunding campaign.
- You, the CEO/COO/Director, will be pulling the weight of campaign. Sure, go ahead and hire “interns” or salesmen or marketing firms – they’ll help. but at the end of the day, you’re accountable for the campaign’s overall success (and your reputation).
- Your campaign rides on a trend, whether it’s the green revolution, tech, design, etc. and make sure that carries through into the look of the campaign. Yes, design matters as much as your product does.
Understand these thoroughly and your willingness to expend time and effort before you assume a justifiable reason to push that campaign out. Remember, not reaching a goal isn’t the main loss to a failed crowdfunding campaign -rather, it hurts your reputation as a startup even more in the eyes of potential funders. Crowdfunding operation guides are all over the internet, and the founders at even the most successful crowdfunding campaigns are surprisingly reachable. Good luck!
Jeremy